The EB-5 Program allows diverse industry sectors to put EB-5 capital to work in projects that transform regional economies, including: assisted-living, commercial real estate, construction, education, energy, entertainment, infrastructure, healthcare, hospitality and more.
There are five ways a foreigner can hope to obtain permanent residency (colloquially dubbed a “greencard”) through employment in the United States. Based on the statutory provisions from which these immigration categories derive, they range from EB-1 to EB-5.
Under the EB-5 program, a foreigner can obtain a conditional greencard by investing a minimum of US$1,000,000 (US$500,000 if the investment project is located in a Targeted Employment Area) to create a new business or invest in an existing business with the promise to create 10 new U.S. jobs by the end of the 2.5 year mark of the approval of the conditional greencard petition, called the I-526. If the investor is investing in an existing business, the infusion of capital must create 10 additional jobs to the jobs that already exist.
Prepare the Source of Funds: After you consult with the AAEB5 team and make the decision to invest in our project, AAEB5’s legal team or your attorney will work closely with you to properly document the source of the funds you are using to invest. Depending on each individual investor’s circumstances, this can take up to two months.
Make Investment & File I-526: After the source of funds have been cleared, the funds will be wired and the investor will file the I-526 petition. Then you wait. And wait. Current I-526 wait times can be found here. (link: https://egov.uscis.gov/cris/processTimesDisplayInit.do) Scroll down to the bottom of the page and click on “IPO Processing Dates” next to where it says “Immigrant Investor Program Office (also known as EB-5)”. As of June 29, 2017, average processing wait time for I-526s is 20 months.
Apply for Conditional Greencard: After the I-526 is approved, you can now apply for the EB-5 visa, which is the greencard. (Technically, the I-526 is not the visa application – but the petition that verifies the basis of the visa.) If you are overseas, your EB-5 visa will be processed by National Visa Center and sent to a US Consulate near you. This is called Consulate Processing. Then the US Consulate will call you in for an interview, after which you will receive your visa stamp. This whole process will take 3 to 6 months depending on the backlog of the US Consulate near you.
If you are already in the United States on a valid non-immigrant visa such as a F-1 student visa or H-1B work visa, for example, you will be eligible to file an Adjustment of Status application on Form I-485. This whole process will also take 3 to 6 months. Generally there is no interview for EB-5 Adjustment of Status applications.
Upon completion of this step, you will receive a “conditional” greencard valid for two years. While the greencard has an expiration date, as a conditional greencard holder, you have the same rights, benefits and duties of a regular greencard holder. So your children can go to school in the United States and you and your spouse can legally work as well.
However, since May 1, 2015, the EB-5 visa numbers for people born in China (regardless of what country’s passport you hold) have been backlogged. As a result Chinese investors will need to wait many years before they can apply for a conditional greencard. The wait time is dependent on a number of factors and assumptions so please consult with your immigration attorney what the estimated wait time is for people filing now. Investors born in China should read also our articles on the Chinese visa backlog (a/k/a retrogression – although this is technically not correct) and the age-out issue of children born in China.
File Form I-829 to Remove Conditions: Your greencard is “conditional” because it is conditioned on your investment contributing to the creation of 10 U.S. jobs. During the last 90 days of your two year conditional greencard period, you will need to file the I-829 petition to remove the conditions. This is where AAEB5 steps up and provides you with all the date required to evidence the creation of jobs. Once the I-829 is filed, your conditional residency period is automatically extended for one year. If the I-829 is not approved within one year, you need to make an InfoPass appointment at your local USCIS office to get another one year extension. As of June 29, 2017, the average wait time for I-829 adjudication is approximately 2 years and 7 months. Once the I-829 is approved, you will be a permanent greencard holder.
While the basic EB-5 program requires a minimum US$1,000,000 investment, if the investment is made into a Targeted Investment Area, (“TEA”), which refers to a high unemployment area as defined by statute, the minimum investment is reduced to US$500,000. Note that the investment amount differs based on the location of the investment project and not whether or not the investment is a direct EB-5 investment or a Regional Center investment.
Practically, however, almost all Regional Center EB-5 projects are located in TEAs. In 2013, for example, 7,135 EB-5 visas were obtained through investment into a Regional Center project located in a TEA while only 4 EB-5 visas were obtained in a Regional Center project with a US$1 million investment requirement. (That is not a typo: FOUR.)
While the EB-5 Program has been around since the early 1990s, its popularity has exploded in recent years. In 2001, only 188 EB-5 visas were issued. In 2006, when the program started to become popular, 802 EB-5 visas were issued. In 2008, the numbers exceeded 3000 and in 2013, 7,312 EB-5 visas were issued. Note that the number of visas issued is not the same as the number of I-526 petitions made. Each approved I-526 petition provides visas for the investor and the investor’s spouse and unmarried children under the age of 21.
When filing an I-526 for a Regional Center EB-5, an EB-5 Economic Report will be included. The Economic Report shows how many indirect jobs will be created from the particular project in which the investor is investing. EB-5 Economic Reports are economic impact analyses using “reasonable methodologies” that have received the blessing of the USCIS. (RIMS II, IMPLAN, REDYN are examples of these methodologies.) Economic impact analyses attempt to measure the effect that a policy or a program or an event has on the economy of a given region. For example, Rutgers University published an economic report estimating that Hurricane Sandy resulted in 4200 jobs lost in Q4 of 2012 in New Jersey; the New York City Economic Development Corporation can quantify the economic impact that Fashion Week or the NYC Marathon has on the local economy, and even how marriage equality impacts the wedding industry in New York City.
In a similar manner, an EB-5 economic report will measure how a certain EB-5 project can have an economic impact of creating jobs in a given region. These economic impact jobs are what are called indirect jobs.
Here is an extremely simplified explanation of how indirect, economic impact jobs are measured using RIMS II: An economist inputs three factors – the industry, the region, and the dollar amount – into the economic model. Let’s say, for example, the EB-5 project at hand is a hotel construction in New York. The construction costs are estimated at $20 million dollars (not including the cost of land). By using the three known variables – the industry (non-residential construction), the region (New York) and the investment amount ($20 million) the economic report will tell us that based on the RIMS II employment multiplier for this region, the EB-5 project, once completed, will create 187 jobs
At the I-526 petition stage of a Regional Center EB-5 investment, the investor needs to submit an EB-5 economic report that outlines the number of jobs that this project is expected to create. And, just like in the Direct EB-5 scenario, the USCIS looks to see if the job projections are based on reasonable and verifiable assumptions. The main difference between the Direct EB-5 and the Regional Center EB-5 comes at the I-829 stage. In a Direct EB-5, the investor provides the USCIS with the payroll and tax records to show job creation. But how do we show that 187 jobs were created in the $20 million hotel example? When counting indirect jobs, we are not counting the construction workers who built the hotel or the staff employed by the hotel – remember, these are real people, hence direct jobs. In the EB-5 Economic Report we said that based on a reasonable economic model accepted by the USCIS, $20 million spent on construction in New York will create 187 jobs and once the USCIS agreed, the individual investor’s I-526 will be approved. Accordingly, at the I-829 PROVE stage, we are not showing actual job creation; rather, the investor needs to show that $20 million was in fact spent on construction in New York as set forth in the original business plan. To prove this you would submit invoices of the construction expenditure, pictures of the construction in progress, and the completed hotel, etc. Once the USCIS is comfortable that the project in fact did what it said it would do at the I-526 stage, the jobs in the economic report will be deemed to have been created. In other words, if the project spent $20 million on construction in New York, the USCIS will deem the 187 jobs to have been created as a result of the spending. And, if because of delays the project is only half done so only $10 million has been spent? Then, only one-half of the 187 jobs, so only 93 jobs will be deemed to have been created.
And, because any given project will have more indirect, economic impact jobs than direct jobs, the Regional Center EB-5 program makes it possible for qualified U.S. businesses to get more investment than through the Direct EB-5. To use the example above, a $20 million hotel somewhere in New York City that is not Manhattan would probably get you a 100-room outfit. Think of a Marriot Residence Inn near one of the airports. How many full-time workers would such a hotel hire? I would say, no more than 40 maximum. (Front desk staff for 24 hours, room service, housekeeping, etc.) That means 4 EB-5 investors could invest $500,000 each and the project job numbers allows you to raise $2 million total. Compare that to 187 jobs – that means 18 EB-5 investors could claim 10 jobs each, and at $500,000 each, the hotel project could raise a total of $9 million. This is the effect of indirect job counting through Regional Centers.
So the answer to the question of “How do you count indirect jobs?” is that you show the economic impact of the project according to what you promised to do at the I-526 stage and the indirect jobs will be deemed to have been created by virtue of the kept promise.
One EB-5 investment will qualify the main investor, the investor’s spouse, and their unmarried children under the age of 21 to immigration together to the United States. And as long as you make the investment and file the I-526 immigration petition before your child turns 21, your child will qualify to immigration with you. (Once the I-526 is approved, you must file for Adjustment of Status or apply for consular processing within one-year of the approval.)
However, this only holds true for non-Chinese investors. As of May 1, 2015, EB-5 visas for people born in China has backlogged. So if you were born in China please read our article on the Chinese visa backlog (a/k/a retrogression – although this is technically not correct) and the age-out issue of children born in China.